A JSE listed IT firm has agreed to “pay back the money” it received from the Department of Defence after it overpriced Microsoft Software Licenses to the tune of R40 million.

Special Investigating Unit (SIU) spokesperson, Kaizer Kganyago, said investigations into R250 million Microsoft Software Licences procurement contracts awarded by the Department of Defence (DoD) to EOH had uncovered “irregularities relating to the procurement process and overpricing of Microsoft Licenses amounting to more than R40 million”. 

Kganyago said investigators had found the contract entered into was irregular and the firm had agreed to pay back the money. 

“The SIU conducted an intensive investigation which revealed the procurement irregularities and overpricing by EOH arising from the 2016 and 2017 procurement of Microsoft licenses,” Kganyago said.

“With specific reference to the overpricing of the Microsoft Licenses, EOH was confronted and acknowledged the overpricing. EOH agreed to sign an Acknowledgement of Debt (AoD) and has since signed AoD with the SIU to the value of R41 676 493.92, which is to be paid back to the DoD,” he said.

The JSE listed company has agreed to pay back the money over a period of three years with interest. 

“The signing or acceptance of the above mentioned AoD by EOH does not mean that EOH is exonerated from paying any further amounts due to the DoD that may be subsequently uncovered by the ongoing investigation of SIU,” he said.

Kganyago added that the SIU would institute civil proceedings in the Special Tribunal to cancel the contract and determine any further funds that the DoD may have lost, in order to recover the money.

“The DoD officials involved and implicated in this irregularities have been identified and referrals of evidence will be made to DoD to institute disciplinary action.  The investigation has also uncovered evidence pointing to criminal action,” he said.

He said the evidence would be referred to the NPA and the Directorate for Priority Crimes Investigation (DPCI) for further attention. 

“The signed AoD does not exonerate any person or official involved from being disciplined or held criminally liable for any criminal conduct that may be revealed by the ongoing investigation of the SIU,” he said.

The SIU was directed in terms of Proclamation R 41 of 2019, to investigate the procurement of or contracting for Microsoft Software Licences by the DoD and payments that were made to its supplier, EOH.

“The allegations that the SIU is investigating are that DoD procured Microsoft Software licenses via an intermediary, EOH, without any valid procurement process having been followed. It was also alleged that DoD paid an inflated price to the intermediary for the licenses which could have been purchased for approximately one third of the price from Microsoft directly,” he said.

Kganyago said the SIU was also investigating an allegation that EOH was contractually obligated to provide 20 035 Microsoft licenses to DoD but had only provided 15 108. 

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Presh JM Reporter

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